The VCFI is the index created by the Port Authority of Valencia to reflect the evolution of the market rates for the export of full containers by sea from Valenciaport. VCFI stands for Valencia Containerised Freight Index. This index will serve shippers as a tool to predict the evolution of freight rates within their markets of interest, which is a key determinant of the cost of their export operations. On the other hand, it will also be useful for operators that offer such services, providing a benchmark for the evolution of their own freight rates and those on the market.

VCFI General

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The Valencia Containerised Freight Index (VCFI) continues its upward trend, with a 3.14% increase in April compared to the previous month, resulting in a value of 1,846.24 points and a cumulative growth of 84.62% since the beginning of the series in 2018. An overall increase is observed in most of the areas analysed, including the Middle East (21.08%), the Far East (19.63%), and the Eastern Mediterranean (15.37%), among others. There is an obvious decrease in the areas of the Indian Subcontinent (-23.30%), Central America and the Caribbean (-7.84%).

The current situation is characterised by the ongoing escalated conflict between Palestine and Israel, which has the effect of maintaining the Red Sea Crisis as a relevant factor influencing international shipping. The recent intensification of hostilities keeps suggesting that the transit of maritime traffic through the Red Sea and Suez Canal may not be a viable option in the short term, prompting shipping companies to redirect the majority of their vessels via the Cape of Good Hope. The alteration of shipping routes is a consequence of the necessity to accommodate the geopolitical circumstances in the region.

Turning to the analysis of factors influencing the supply and demand for shipping, specifically on the demand side, all indications are that it is improving.  Indicators such as the Order Fill Rate (OFR), which measures the number of orders filled, and the continued growth of the fleet, point to positive developments. However, this improvement could become exposed to geopolitical risks. There are encouraging signs of economic growth in some major countries, as reflected in the upward revision of real GDP growth projections for 2024 by S&P Global Ratings in its April forecasts. These include the eurozone, Canada, Japan and Russia. Besides, the International Monetary Fund (IMF), in its April World Economic Outlook, expects the global recovery to be steady but slow, with a 3.2% growth in 2024 and 2025. The Purchasing Managers’ Index (PMI), being another important indicator to consider, points to an increase in global growth momentum in March.

The latest RWI/ISL Container Throughput Index, published in April, indicates that port traffic has increased compared to the previous month. This suggests that there has been an increase in demand for shipping from international trade. It is worth mentioning that there has been a notable increase in container traffic in European ports, possibly influenced by a range of different factors. A contributing factor could be that container ships choose to avoid the Red Sea area, sailing around Africa instead, leading to delayed delivery of some of the expected cargo. This increase in container volumes could also be attributed to the apparent acceleration of the economic recovery within the Eurozone. This is also seen in the significant increase in the North Range Index, which acts as an indicator of economic development in the northern Eurozone and Germany. The index had a significant increase, indicating strengthening of economic momentum in the region.

Looking at factors affecting shipping supply, in the energy and commodities market, a slight increase in the average price per barrel of Brent crude oil was observed in April, reaching $90.02, compared to $85.41 in February, an increase of 5.4%. In addition, in the field of marine fuels, the cost of bunkering in the world’s top 20 ports, as reported by Ship&Bunker, demonstrated a slight decrease of 0.3 per cent for VLSFO (Very Low Sulphur Fuel Oil), from $667.18 in March to $665.23 in April.

In terms of idle fleet levels, the insecure situation in parts of the Red Sea and subsequent vessel diversions via the Cape of Good Hope continue to force carriers to inject additional tonnage into their routes. This additional demand continues to keep container vessel idle capacity low so that at the end of April, only 0,6% of the global fleet was idle. With this, as of 22 April, Alphaliner counted 65 commercially inactive vessels with a total capacity of 181,185 TEU.

A noteworthy fact is that, after the return to normality and after the seasonal peak, blank sailings have continued to decrease. Thus, according to the information provided by Drewry in its “Cancelled Sailings Tracker”, on the main East-West cabotage routes: A total of 47 cancelled sailings have been announced on the Transpacific, Transatlantic and Asia-North Europe & Med routes between week 18 (29 April-5 May) and week 22 (25 May-2 June). This represents a cancellation rate of 7% out of a total of 643 scheduled sailings. Furthermore, during this period 49% of blank sailings will take place on the eastbound Transpacific route, 34% on the Asia-North Europe and Mediterranean route and 17% on the westbound Transatlantic route. In terms of port congestion, analysis by the consultancy Linerlytica indicates that the situation worsened comparing to previous weeks. In particular, during week 18, the level of port congestion reached 1.86 million TEUs, representing 6.3% of the total fleet. This differs slightly with the data observed in the previous week’s reading of 1.46 million TEUs, representing 5.1% of the total fleet.

VCFI Western Mediterranean

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The Western Mediterranean sub-index has increased by 4.42% compared to the previous month. The VCFI for the Western Mediterranean area has now reached 2,020.97 points, which is a 102.10% increase since the series began in 2018. With respect to Valenciaport, the most recent data shows an increase in the volume of exports to Morocco and Algeria, and a more notable increase to Tunisia.

VCFI Far East

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In the Far East region, the index has increased by 19.63% to 2,900.18 points, representing a cumulative growth of 190.02% since the start of the series in January 2018. In all of this, it is essential to consider the uniqueness of the current context, which is characterised by significant geopolitical instability. While there are signs that demand is gaining momentum and the economic recovery is materialising, it is crucial to observe the development of the supply-demand dynamics in shipping.

Additional operational costs arising from new route reconfigurations, together with port congestion are important supply-side issues to consider. There is no doubt that the combination of these factors creates a challenging climate in the logistics sector, which, therefore, requires constant attention.